Apex Bridging reveals a huge spike in bridging lending during the first quarter of this year, primarily driven by chain breaks following the market turbulence caused by last September’s mini budget. 

The analysis by the bridging finance specialist shows that £278.8m was lent via bridging loans during the first quarter of 2023, a 68% increase versus the previous quarter and by far the highest quarterly sum seen over the last two years. 

Bridging lending previously peaked in third quarter 20022 at £214.7m, before the market uncertainty caused by September’s mini budget caused many to reassess their position within the market.

This saw total bridging lending fall by 23% during the final quarter of that year but, now that the dust has settled, this downward trend has reversed significantly. 

While investment purchases were the key factor behind bridging loans during the final quarter of 2022, it was chain breaks driving the sector in Q1 of this, accounting for a quarter of all lending.

This highlights the tougher market conditions facing many buyers and sellers who are now having to adapt with higher borrowing costs and cooling house prices. 

However, investment purchases remained the second biggest factor behind bridging lending during the first quarter of this year, with unregulated transactions also accounting for the largest proportion of market activity at 53.8%. 

Apex Bridging managing director Chris Hodgkinson comments: “The breakdown of the bridging sector demonstrates the changing landscape we’ve seen in recent months, with the mortgage market turbulence caused by September’s mini budget resulting in a higher degree of borrowing as a result of chain breaks. 

 He adds: “ As the year progresses, we expect stability to return to the residential market, which should reduce the level of bridging required to remedy chain breaks. At the same time also expect unregulated commercial investment activity to remain robust.”